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Purpose Monthly Income Fund April Commentary

Tuesday May 13th, 2014

Market Commentary

Price action across most assets was generally choppy and range bound, which resulted in volatility falling across the board. Geopolitical concerns in the Ukraine continued to weigh on risk sentiment causing a dip early in the month. However, markets shrugged off these concerns in the belief that prolonged tensions between Russia and the G7 would not escalate. The U.S. saw better ISM and PMI data supporting an outlook for accelerating growth. In addition, the Federal Reserve Board (Fed) and European Central Bank (ECB) both maintained a dovish outlook, with the Fed downplaying a specific path for tightening and promising that it would keep rates near zero for a “considerable time.” China data was still weak and served as an overhang on the EM complex. In commodities, crude and wheat prices rallied as Ukraine tensions escalated. Gold and silver initially saw a safe haven bid, but they eventually sold off on declining Chinese demand. Despite continued dovish comments from the Bank of Canada (BOC), the Canadian dollar strengthened last month on the back of better than expected economic data and a generally weaker U.S. dollar.

Fund Commentary

The Fund has an income allocation to bonds and high-dividend equities, and has a real asset allocation for purchasing power protection.
The Fund was up for the month of April from all three of its allocations as the Fund’s exposure to real assets, bonds and dividend paying equities all generated positive returns during the month.
The best performing sectors for income equities were energy, consumer staples and utilities, while the worst performing sectors were telecommunications, industrials and consumer discretionary. Among real assets, the best sectors were energy, real estate and base metals, while the worst sectors were precious metals and agriculture. The bond allocation was higher in April with the largest exposure and best performing allocation to high yield corporate credit. The Fund continued to hedge its USD currency exposure, maintaining a net USD exposure of approximately 10% of the Fund’s NAV.

WE ARE PURPOSE

Purpose Investments is an employee-owned Canadian investment firm with over $3.6 billion in assets under management. Purpose offers ETFs, mutual funds and closed-end funds, and is dedicated to enhancing the quality of investment funds offered to Canadians.